UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 2, 2012
Generac Holdings Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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001-34627
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20-5654756
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(State or other jurisdiction
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(Commission
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(IRS Employer
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of incorporation)
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File Number)
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Identification No.)
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S45 W29290 Hwy. 59
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Waukesha, Wisconsin
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53189
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(Address of principal executive offices)
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(Zip Code)
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(262) 544-4811
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02 Results of Operations and Financial Condition
On August 2, 2012, Generac Holdings Inc. (the “Company,” “we,” “us” or “our”) issued a press release (the “Earnings Release”) announcing its financial results for the second quarter 2012. A copy of the Earnings Release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information contained in this Current Report on Form 8-K (including the exhibits) is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information contained in this Current Report on Form 8-K shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.
Discussion of Non-GAAP Financial Measures
In the Earnings Release, we present certain financial information, specifically Adjusted EBITDA, Adjusted net income, free cash flow, Pro forma sales and Pro forma adjusted EBITDA, which are not in accordance with generally accepted accounting principles, or U.S. GAAP. We present Adjusted EBITDA, Adjusted net income, free cash flow, Pro forma sales and Pro forma adjusted EBITDA in the Earnings Release because these metrics assist us in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Our management uses Adjusted EBITDA, Adjusted net income, free cash flow, Pro forma sales and Pro forma adjusted EBITDA:
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·
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for planning purposes, including the preparation of our annual operating budget and developing and refining our internal projections for future periods;
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to evaluate the effectiveness of our business strategies and as a supplemental tool in evaluating our performance against our budget for each period; and
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in communications with our board of directors and investors concerning our financial performance; and
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to evaluate prior acquisitions in relation to the existing business.
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We also use Adjusted EBITDA as a benchmark for the determination of the bonus component of compensation for our senior executives under our management incentive plans.
We believe that the disclosure of Adjusted EBITDA, Adjusted net income, free cash flow, Pro forma sales and Pro forma adjusted EBITDA offers additional financial metrics which, when coupled with U.S. GAAP results and the reconciliation to U.S. GAAP results, provide a more complete understanding of our results of operations and the factors and trends affecting our business for securities analysts, investors and other interested parties in the evaluation of our company. We believe Adjusted EBITDA, Adjusted net income, free cash flow, Pro forma sales and Pro forma adjusted EBITDA are useful to investors for the following reasons:
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Adjusted EBITDA, Adjusted net income, free cash flow, Pro forma sales and Pro forma adjusted EBITDA and similar non-GAAP measures are widely used by investors to measure a company’s operating performance without regard to items that can vary substantially from company to company depending upon financing and accounting methods, book values of assets, tax jurisdictions, capital structures and the methods by which assets were acquired; and
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by comparing our Adjusted EBITDA, Adjusted net income, free cash flow, Pro forma sales and Pro forma adjusted EBITDA in different historical periods, our investors can evaluate our operating performance excluding the impact of certain items.
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Item 9.01 Financial Statements and Exhibits
(d)
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Exhibit No.
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Description
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Press Release, dated August 2, 2012.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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GENERAC HOLDINGS INC.
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/s/ York Ragen
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Name:
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York Ragen
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Date: August 2, 2012
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Title:
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Chief Financial Officer
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EXHIBIT INDEX
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99.1
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Press Release, dated August 2, 2012.
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Generac Reports Strong Second Quarter 2012 Results
Strong organic revenue growth from residential products and Magnum Products acquisition drive continued increase in revenue and EBITDA – Outlook raised for full-year 2012
WAUKESHA, WISCONSIN, August 2, 2012 – Generac Holdings Inc. (NYSE: GNRC), a leading designer and manufacturer of generators and other engine powered products, today reported financial results for its second quarter ended June 30, 2012.
Highlights
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Net sales increased year-over-year by 48.2% to $239.1 million as compared to $161.4 million in the second quarter of 2011.
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Residential product sales increased 33.8% compared to the second quarter of 2011.
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-
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Commercial & Industrial (C&I) product sales increased 76.4% compared to the prior year second quarter.
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Net sales over the trailing four quarters were $1.040 billion; on a pro-forma basis, when including the results for Magnum Products for the entire period, net sales were $1.082 billion.
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Net income was $9.3 million or $0.14 per share for the second quarter of 2012 as compared to $15.3 million or $0.23 per share for the same period of 2011. The current year results include a charge for refinancing costs and a normalized effective income tax rate. Adjusted net income, as defined in the accompanying reconciliation schedules, increased to $39.9 million from $27.7 million in the second quarter of 2011. Adjusted diluted net income per common share was $0.58 as compared to $0.41 per share in the second quarter of 2011.
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Adjusted EBITDA increased to $54.6 million as compared to $37.6 million in the second quarter last year.
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Cash flow from operations in the second quarter of 2012 was $21.1 million as compared to $15.3 million in the prior year quarter. Free cash flow was $17.8 million as compared to $13.5 million in the second quarter of 2011.
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For the trailing four quarters, net income was $343.9 million; adjusted EBITDA, pro-forma for Magnum Products was $258.3 million; cash flow from operations was $201.4 million; and free cash flow was $187.3 million, which represents 90% of the adjusted net income reported during that time period.
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The Company is raising its sales growth guidance for full-year 2012 to the low-20% range over the prior year, which represents an increase from the high-teens growth rate previously expected. As a result, Adjusted EBITDA for the full-year 2012 is now expected to increase in the high-teens range over the prior year, which is an increase from the mid-teens growth rate previously expected.
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“Our second quarter results continue to demonstrate the progress we are making in executing our Powering Ahead strategic plan,” said Aaron Jagdfeld, President and Chief Executive Officer. “Growth in shipments of home standby and portable generators were again strong during the second quarter. In particular, the market for our home standby generators continues to develop as more home owners discover the importance of having backup power. In our commercial and industrial products, Magnum continues to perform well as demand for mobile equipment is benefiting from a shift towards renting versus buying. In addition, while still a smaller portion of the overall C&I market, our leadership position in natural gas backup generators within North America has allowed us to benefit from the increased demand for these products.”
Second Quarter 2012 Details
Residential product sales for the second quarter of 2012 increased 33.8% to $123.4 million from $92.2 million for the comparable period in 2011. The growth was primarily driven by strong double-digit increases in shipments for both home standby and portable generators. The Company’s efforts to increase awareness and availability of home standby generators together with execution in meeting the increased demand for these products have helped to drive baseline growth. In addition, expanded placement for portable generator products continues to lead to year-over-year market share gains. Increased revenue from the power washer product line, which began shipping in the second quarter of 2011, also contributed modestly to the year-over-year sales growth in residential products.
C&I product sales for the second quarter of 2012 increased 76.4% to $101.1 million from $57.3 million for the comparable period in 2011. The increase in net sales was primarily driven by the Magnum Products acquisition, and to a lesser extent, increased shipments of natural gas backup generators, partially offset by a decline in shipments to national account customers.
Gross profit margin for the second quarter of 2012 was 36.6% compared to 37.4% in the second quarter of 2011. Gross margin declined over the prior year due to the mix impact from the addition of Magnum Products sales, which was partially offset by a higher mix of home standby generators and the positive impact from price increases, improved overhead absorption and moderation in commodity costs relative to the prior year.
Operating expenses for the second quarter of 2012 increased by $11.7 million or 30.4% as compared to the second quarter of 2011. These additional expenses were driven primarily by operating expenses associated with Magnum, increased sales, engineering and administrative infrastructure to support the strategic growth initiatives and higher baseline sales levels of the Company, increased incentive compensation expenses as a result of the Company’s financial performance during the quarter, and increased variable operating expenses resulting from the double-digit increase in organic sales.
As previously announced, on May 30, 2012, the Company completed a refinancing of its senior secured credit facilities, pursuant to which it has incurred $900 million of senior secured term loans to replace its prior $575 million term loan facilities. Following the refinancing, the Company used the available proceeds from the new term loans and cash on hand to fund a special cash dividend to its stockholders of $6.00 per share and to pay related financing fees and expenses. The special dividend, which was paid on June 29, 2012, constituted a declared amount of approximately $408 million in the aggregate of which $404 million was paid in the quarter. In conjunction with this refinancing, an approximate $11.0 million non-recurring charge was recorded during the second quarter of 2012 relating to refinancing costs and other related expenses. As a result of the higher debt levels from the refinancing, interest expense in the second quarter of 2012 increased to $9.9 million compared to $5.9 million in the same period last year.
Net income in the current year quarter includes the impact of a normalized effective income tax rate of 40.5% as compared to a tax rate of 0.6% in the prior-year second quarter. Until the fourth quarter of 2011, a full valuation allowance was recorded on the Company’s net deferred tax assets, resulting in substantially no tax provision. A full valuation allowance is no longer required on the Company’s net deferred tax assets, and therefore, a normalized income tax provision was recorded in the second quarter of 2012. However, the Company’s cash tax obligations are expected to remain nominal given its current tax attributes.
Free cash flow was $17.8 million in the second quarter of 2012 as compared to $13.5 million in the same period last year. Strong operating earnings were partially offset by increased working capital investment driven by seasonal finished goods inventory replenishment and additional raw material safety stock for rapid demand response.
Outlook
The Company is revising upward its sales guidance for full-year 2012 as a result of solid execution in the second quarter of 2012 and an increased outlook for residential sales for the third quarter of 2012. Full-year 2012 total net sales are now expected to increase in the low-20% range over the prior year, which represents an increase from the high-teens growth rate previously expected. The higher revenue outlook is primarily attributable to recent major power outage events that occurred in the Midwest and Mid-Atlantic regions in late June and early July. The Company expects these events should result in improved shipments of portable and home standby generators, relative to prior guidance, due to the increased awareness and demand for back-up power. This revised guidance continues to assume no material changes in the macroeconomic environment, as well as no additional major power outage events during the remainder of 2012.
As a result of this higher sales outlook, Adjusted EBITDA for the full-year 2012 is now expected to increase in the high-teens range over the prior year, which is an increase from the mid-teens growth rate previously expected.
As previously announced, the Company’s guidance for interest expense for the full-year 2012 is expected to be in the range of $49.0 to $50.0 million, which includes $45.0 to $45.5 million of debt service costs, at current LIBOR rates, plus approximately $4.5 million for deferred financing cost and original issue discount amortization for the new credit facility. Interest expense during the third quarter of 2012, the first full quarter under the new capital structure, is expected to be approximately $17.1 to $17.3 million, which includes approximately $1.5 million of deferred financing cost and original issue discount amortization.
Mr. Jagdfeld continued, “Major outage events like the ones recently experienced in the Midwest and Mid-Atlantic regions demonstrate the fact that prolonged under investment in the aging electrical grid in the U.S. is leading to more frequent and longer power disruptions for homeowners and businesses. Given the relatively low awareness and penetration of home and light-commercial standby generators, we believe there is significant growth opportunity as the leader in this emerging product category. Our Powering Ahead strategic plan focuses on baseline sales growth within new and existing products and markets, and complements the powerful secular trends that continue to drive our business. Add to this the potential for future recovery in both residential investment and non-residential construction, and we believe Generac is well positioned over the long term to continue driving organic revenue growth, superior margins and strong free cash flow.”
Conference Call and Webcast
Generac management will hold a conference call at 9:00 a.m. EDT on Thursday, August 2, 2012 to discuss highlights of this earnings release. The conference call can be accessed by dialing (866) 314-4483 (domestic) or +1 (617) 213-8049 (international) and entering passcode 55783069.
The conference call will also be webcast simultaneously on Generac's website (http://www.generac.com), under the Investor Relations link. The webcast link and supporting materials, if any, will be made available on the Company’s website prior to the start of the call.
Following the live webcast, a replay will be available on the Company's web site. A telephonic replay will also be available approximately one hour after the call and can be accessed by dialing (888) 286-8010 (domestic) or +1 (617) 801-6888 (international) and entering passcode 41917818. The telephonic replay will be available for 30 days.
Generac company news is available
24 hours a day, on-line at: http://www.generac.com.
About Generac
Since 1959, Generac has been a leading designer and manufacturer of a wide range of generators and other engine powered products. As a leader in power equipment serving residential, light commercial, industrial and construction markets, Generac's power products are available through a broad network of independent dealers, retailers, wholesalers and equipment rental companies. The Company markets and distributes its products primarily under its Generac and Magnum brand names.
Forward-looking Information
Certain statements contained in this news release, as well as other information provided from time to time by Generac Holdings Inc. or its employees, may contain forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements. Forward-looking statements give Generac's current expectations and projections relating to the Company's financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate," "estimate," "expect," "project," "plan," "intend," "believe," "confident," "may," "should," "can have," "likely," "future" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.
Any such forward looking statements are not guarantees of performance or results, and involve risks, uncertainties (some of which are beyond the Company's control) and assumptions. Although Generac believes any forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Generac's actual financial results and cause them to differ materially from those anticipated in any forward-looking statements, including:
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demand for Generac products;
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frequency and duration of major power outages;
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availability, cost and quality of raw materials and key components used in producing Generac products;
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the impact on our results of the substantial increases in our outstanding indebtedness and related interest expense due to the dividend recapitalization completed in May 2012;
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the possibility that the expected synergies, efficiencies and cost savings of the acquisition of the Magnum Products business will not be realized, or will not be realized within the expected time period;
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the risk that the Magnum Products business will not be integrated successfully;
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competitive factors in the industry in which Generac operates;
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Generac's dependence on its distribution network;
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Generac's ability to invest in, develop or adapt to changing technologies and manufacturing techniques;
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loss of key management and employees;
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increase in product and other liability claims; and
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changes in environmental, health and safety laws and regulations.
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Should one or more of these risks or uncertainties materialize, Generac's actual results may vary in material respects from those projected in any forward-looking statements. A detailed discussion of these and other factors that may affect future results is contained in Generac's filings with the U.S. Securities and Exchange Commission (“SEC”).
Any forward-looking statement made by Generac in this press release speaks only as of the date on which it is made. Generac undertakes no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Reconciliations to GAAP Financial Metrics
Adjusted EBITDA
The computation of Adjusted EBITDA is based on the definition of EBITDA contained in Generac's credit agreement, dated as of May 30, 2012, which is substantially the same definition that was contained in the Company’s previous credit agreements. To supplement the Company's condensed consolidated financial statements presented in accordance with US GAAP, Generac provides a summary to show the computation of Adjusted EBITDA, taking into account certain charges and gains that were taken during the periods presented.
Adjusted Net Income
To further supplement Generac's condensed consolidated financial statements presented in accordance with US GAAP, the Company provides a summary to show the computation of Adjusted net income. Adjusted net income is defined as Net income before provision (benefit) for income taxes adjusted for the following items: cash income tax (expense) benefit, amortization of intangible assets, amortization of deferred financing costs and original issue discount related to the Company's debt, intangible impairment charges, certain transaction costs and other purchase accounting adjustments, and certain non-cash gains and losses.
Free Cash Flow
In addition, we reference free cash flow to further supplement Generac's condensed consolidated financial statements presented in accordance with US GAAP. Free cash flow is defined as Net cash provided by operating activities less Expenditures for property and equipment and is intended to be a measure of operational cash flow taking into account additional capital expenditure investment into the business.
The presentation of this additional information is not meant to be considered in isolation of, or as a substitute for, results prepared in accordance with US GAAP. Please see our SEC filings for additional discussion of the basis for Generac's reporting of Non-GAAP financial measures.
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Generac Holdings Inc.
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Condensed Consolidated Statements of Comprehensive Income
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(Dollars in Thousands, Except Share and Per Share Data)
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(Unaudited)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2012
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2011
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2012
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2011
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Net sales
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$ | 239,137 | $ | 161,363 | $ | 533,698 | $ | 285,344 | ||||||||
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Costs of goods sold
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151,708 | 101,010 | 335,264 | 177,814 | ||||||||||||
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Gross profit
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87,429 | 60,353 | 198,434 | 107,530 | ||||||||||||
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Operating expenses:
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Selling and service
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22,122 | 17,317 | 47,248 | 31,622 | ||||||||||||
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Research and development
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5,703 | 3,608 | 10,758 | 7,493 | ||||||||||||
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General and administrative
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10,158 | 5,772 | 19,264 | 11,889 | ||||||||||||
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Amortization of intangibles
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12,288 | 11,856 | 24,513 | 23,583 | ||||||||||||
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Total operating expenses
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50,271 | 38,553 | 101,783 | 74,587 | ||||||||||||
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Income from operations
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37,158 | 21,800 | 96,651 | 32,943 | ||||||||||||
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Other (expense) income:
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Interest expense
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(9,894 | ) | (5,934 | ) | (15,568 | ) | (11,935 | ) | ||||||||
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Investment income
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29 | 23 | 48 | 59 | ||||||||||||
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Loss on extinguishment of debt
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(9,999 | ) | (186 | ) | (14,308 | ) | (186 | ) | ||||||||
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Other, net
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(1,595 | ) | (327 | ) | (2,020 | ) | (568 | ) | ||||||||
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Total other expense, net
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(21,459 | ) | (6,424 | ) | (31,848 | ) | (12,630 | ) | ||||||||
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Income before provision for income taxes
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15,699 | 15,376 | 64,803 | 20,313 | ||||||||||||
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Provision for income taxes
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6,364 | 87 | 25,408 | 180 | ||||||||||||
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Net income
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$ | 9,335 | $ | 15,289 | $ | 39,395 | $ | 20,133 | ||||||||
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Net income per common share - basic:
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$ | 0.14 | $ | 0.23 | $ | 0.59 | $ | 0.30 | ||||||||
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Weighted average common shares outstanding - basic:
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67,309,260 | 67,134,999 | 67,254,870 | 67,121,356 | ||||||||||||
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Net income per common share - diluted:
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$ | 0.14 | $ | 0.23 | $ | 0.57 | $ | 0.30 | ||||||||
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Weighted average common shares outstanding - diluted:
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68,645,533 | 67,718,654 | 68,599,867 | 67,463,440 | ||||||||||||
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Dividends declared per share
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$ | 6.00 | $ | - | $ | 6.00 | $ | - | ||||||||
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Comprehensive income
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$ | 10,039 | $ | 12,587 | $ | 40,030 | $ | 17,986 | ||||||||
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Generac Holdings Inc.
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Condensed Consolidated Balance Sheets
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(Dollars in Thousands, Except Share and Per Share Data)
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June 30,
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December 31,
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2012
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2011
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(Unaudited)
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(Audited)
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Assets
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Current assets:
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Cash and cash equivalents
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$ | 10,307 | $ | 93,126 | ||||
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Accounts receivable, less allowance for doubtful accounts
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100,108 | 109,705 | ||||||
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Inventories
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227,038 | 162,124 | ||||||
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Deferred income taxes
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17,000 | 14,395 | ||||||
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Prepaid expenses and other assets
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4,503 | 3,915 | ||||||
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Total current assets
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358,956 | 383,265 | ||||||
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Property and equipment, net
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85,786 | 84,384 | ||||||
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Customer lists, net
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53,785 | 72,897 | ||||||
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Patents, net
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74,276 | 78,167 | ||||||
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Other intangible assets, net
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6,548 | 7,306 | ||||||
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Deferred financing costs, net
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15,078 | 3,459 | ||||||
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Trade names, net
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148,434 | 148,401 | ||||||
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Goodwill
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547,968 | 547,473 | ||||||
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Deferred income taxes
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200,900 | 227,363 | ||||||
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Other assets
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44 | 78 | ||||||
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Total assets
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$ | 1,491,775 | $ | 1,552,793 | ||||
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Liabilities and stockholders’ equity
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Current liabilities:
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Short-term borrowings
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$ | 13,000 | $ | – | ||||
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Accounts payable
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75,391 | 81,053 | ||||||
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Accrued wages and employee benefits
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12,405 | 14,439 | ||||||
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Other accrued liabilities
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59,881 | 47,024 | ||||||
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Current portion of long-term borrowings
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6,750 | 22,874 | ||||||
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Total current liabilities
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167,427 | 165,390 | ||||||
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Long-term borrowings
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875,513 | 575,000 | ||||||
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Other long-term liabilities
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44,229 | 43,514 | ||||||
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Total liabilities
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1,087,169 | 783,904 | ||||||
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Stockholders’ equity:
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Common stock, par value $0.01, 500,000,000 shares authorized, 68,055,203 and 67,652,812 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively
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680 | 676 | ||||||
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Additional paid-in capital
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738,384 | 1,142,701 | ||||||
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Excess purchase price over predecessor basis
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(202,116 | ) | (202,116 | ) | ||||
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Accumulated deficit
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(117,620 | ) | (157,015 | ) | ||||
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Accumulated other comprehensive loss
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(14,722 | ) | (15,357 | ) | ||||
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Total stockholders’ equity
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404,606 | 768,889 | ||||||
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Total liabilities and stockholders’ equity
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$ | 1,491,775 | $ | 1,552,793 | ||||
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Generac Holdings Inc.
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Condensed Consolidated Statements of Cash Flows
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(Dollars in Thousands)
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(Unaudited)
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Six Months Ended June 30,
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2012
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2011
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Operating activities
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Net income
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$ | 39,395 | $ | 20,133 | ||||
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Adjustments to reconcile net income to net cash provided by operating activities:
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Depreciation
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3,995 | 3,940 | ||||||
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Amortization of intangible assets
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24,513 | 23,583 | ||||||
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Amortization of original issue discount
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343 | – | ||||||
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Amortization of deferred financing costs
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1,016 | 996 | ||||||
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Loss on extinguishment of debt
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14,308 | 186 | ||||||
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Provision for losses on accounts receivable
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67 | (29 | ) | |||||
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Deferred income taxes
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23,610 | – | ||||||
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Loss on disposal of property and equipment
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91 | 18 | ||||||
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Share-based compensation expense
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5,257 | 3,717 | ||||||
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Net changes in operating assets and liabilities:
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Accounts receivable
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10,676 | (16,627 | ) | |||||
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Inventories
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(64,609 | ) | (12,591 | ) | ||||
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Other assets
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(306 | ) | 1,183 | |||||
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Accounts payable
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(6,043 | ) | 2,927 | |||||
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Accrued wages and employee benefits
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(2,034 | ) | (19 | ) | ||||
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Other accrued liabilities
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9,428 | 567 | ||||||
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Net cash provided by operating activities
|
59,707 | 27,984 | ||||||
|
Investing activities
|
||||||||
|
Proceeds from sale of property and equipment
|
16 | 4 | ||||||
|
Expenditures for property and equipment
|
(5,504 | ) | (3,404 | ) | ||||
|
Acquisition of business
|
(2,279 | ) | – | |||||
|
Net cash used in investing activities
|
(7,767 | ) | (3,400 | ) | ||||
|
Financing activities
|
||||||||
|
Proceeds from short-term borrowings
|
13,000 | – | ||||||
|
Proceeds from long-term borrowings
|
1,455,614 | – | ||||||
|
Repayments of long-term borrowings
|
(1,172,874 | ) | (24,731 | ) | ||||
|
Payment of debt issuance costs
|
(24,928 | ) | – | |||||
|
Cash dividends paid
|
(404,332 | ) | – | |||||
|
Taxes paid related to the net share settlement of equity awards
|
(2,785 | ) | – | |||||
|
Excess tax benefits from equity awards
|
1,546 | – | ||||||
|
Proceeds from exercise of stock options
|
– | 310 | ||||||
|
Net cash used in financing activities
|
(134,759 | ) | (24,421 | ) | ||||
|
|
||||||||
|
Net (decrease) increase in cash and cash equivalents
|
(82,819 | ) | 163 | |||||
|
Cash and cash equivalents at beginning of period
|
93,126 | 78,583 | ||||||
|
Cash and cash equivalents at end of period
|
$ | 10,307 | $ | 78,746 | ||||
|
Generac Holdings Inc.
|
||||||||||||||||||||
|
Reconciliation Schedules
|
||||||||||||||||||||
|
(Dollars in Thousands, Except Share and Per Share Data)
|
||||||||||||||||||||
|
Net income to Adjusted EBITDA reconciliation
|
||||||||||||||||||||
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
Year Ended December 31,
|
||||||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
2011
|
||||||||||||||||
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
||||||||||||||||
|
Net income
|
$ | 9,335 | $ | 15,289 | $ | 39,395 | $ | 20,133 | $ | 324,643 | ||||||||||
|
Interest expense
|
9,894 | 5,934 | 15,568 | 11,935 | 23,718 | |||||||||||||||
|
Depreciation and amortization
|
14,290 | 13,860 | 28,508 | 27,523 | 56,123 | |||||||||||||||
|
Income taxes provision
|
6,364 | 87 | 25,408 | 180 | (237,677 | ) | ||||||||||||||
|
Non-cash impairment and other charges (1)
|
454 | 158 | 250 | 604 | 10,400 | |||||||||||||||
|
Non-cash share-based compensation expense (2)
|
2,818 | 1,717 | 5,257 | 3,717 | 8,646 | |||||||||||||||
|
Loss on extinguishment of debt
|
9,999 | 186 | 14,308 | 186 | 377 | |||||||||||||||
|
Transaction costs and credit facility fees (3)
|
1,284 | 258 | 1,419 | 431 | 1,719 | |||||||||||||||
|
Other
|
153 | 127 | 280 | 391 | 527 | |||||||||||||||
|
Adjusted EBITDA
|
$ | 54,591 | $ | 37,616 | $ | 130,393 | $ | 65,100 | $ | 188,476 | ||||||||||
|
(1) Includes losses on disposals of assets, amortization of earn-out discount and unrealized mark-to-market adjustments on commodity contracts. A full description of these and the other reconciliation adjustments contained in these schedules is included in Generac's SEC filings.
|
||||||||||||||||||||
|
(2) Includes share-based compensation expense to account for stock options, restricted stock and other stock awards over their respective vesting periods.
|
||||||||||||||||||||
|
(3) Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement, equity issuance or debt issuance or refinancing, together with certain fees relating to our senior secured credit facilities.
|
||||||||||||||||||||
|
Net income to Adjusted net income reconciliation
|
||||||||||||||||
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|||||||||||||
|
Net income
|
$ | 9,335 | $ | 15,289 | $ | 39,395 | $ | 20,133 | ||||||||
|
Provision for income taxes
|
6,364 | 87 | 25,408 | 180 | ||||||||||||
|
Income before provision for income taxes
|
15,699 | 15,376 | 64,803 | 20,313 | ||||||||||||
|
Amortization of intangible assets
|
12,288 | 11,856 | 24,513 | 23,583 | ||||||||||||
|
Amortization of deferred financing costs and original issue discount
|
853 | 494 | 1,359 | 996 | ||||||||||||
|
Transaction costs and other purchase accounting adjustments (4)
|
1,292 | - | 1,292 | - | ||||||||||||
|
Loss on extinguishment of debt
|
9,999 | 186 | 14,308 | 186 | ||||||||||||
|
Adjusted net income before provision for income taxes
|
40,131 | 27,912 | 106,275 | 45,078 | ||||||||||||
|
Cash income tax expense
|
(272 | ) | (256 | ) | (327 | ) | (280 | ) | ||||||||
|
Adjusted net income
|
$ | 39,859 | $ | 27,656 | $ | 105,948 | $ | 44,798 | ||||||||
|
Adjusted net income per common share - diluted:
|
$ | 0.58 | $ | 0.41 | $ | 1.54 | $ | 0.66 | ||||||||
|
Weighted average common shares outstanding - diluted:
|
68,645,533 | 67,718,654 | 68,599,867 | 67,463,440 | ||||||||||||
|
(4) Represents transaction costs and other purchase accounting adjustments incurred directly in connection with any investment, as defined in our credit agreement, equity issuance or debt issuance or refinancing.
|
||||||||||||||||
|
Free cash flow reconciliation
|
||||||||||||||||
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|||||||||||||
|
Net cash provided by operating activities
|
$ | 21,123 | $ | 15,313 | $ | 59,707 | $ | 27,984 | ||||||||
|
Expenditures for property and equipment
|
(3,366 | ) | (1,835 | ) | (5,504 | ) | (3,404 | ) | ||||||||
|
Free cash flow
|
$ | 17,757 | $ | 13,478 | $ | 54,203 | $ | 24,580 | ||||||||
|
LTM June 30,
|
||||
|
2012
|
||||
|
(unaudited)
|
||||
|
2011 net cash provided by operating activities, as reported
|
$ | 169,712 | ||
|
Add: June 2012 YTD net cash provided by operating activities, as reported
|
59,707 | |||
|
Less: June 2011 YTD net cash provided by operating activities, as reported
|
(27,984 | ) | ||
|
LTM net cash provided by operating activities
|
201,435 | |||
|
2011 expenditures for property and equipment, as reported
|
(12,060 | ) | ||
|
Include: June 2012 YTD expenditures for property and equipment, as reported
|
(5,504 | ) | ||
|
Exclude: June 2011 YTD expenditures for property and equipment, as reported
|
3,404 | |||
|
LTM expenditures for property and equipment
|
(14,160 | ) | ||
|
Free cash flow
|
$ | 187,275 | ||
|
Pro forma sales reconciliation
|
LTM June 30,
|
|||
|
2012
|
||||
|
(unaudited)
|
||||
|
2011 net sales, as reported
|
$ | 791,976 | ||
|
Add: June 2012 YTD net sales, as reported
|
533,698 | |||
|
Less: June 2011 YTD net sales, as reported
|
(285,344 | ) | ||
|
Pro forma Magnum net sales (July 1, 2011 - September 30, 2011)
|
41,689 | |||
|
Pro forma net sales
|
$ | 1,082,019 | ||
|
Pro forma Adjusted EBITDA reconciliation
|
LTM June 30,
|
|||
|
2012
|
||||
|
(unaudited)
|
||||
|
2011 Adjusted EBITDA, as reported
|
$ | 188,476 | ||
|
Add: June 2012 YTD Adjusted EBITDA, as reported
|
130,393 | |||
|
Less: June 2011 YTD Adjusted EBITDA, as reported
|
(65,100 | ) | ||
|
Pro forma Magnum adjusted EBITDA (July 1, 2011 - September 30, 2011)
|
4,560 | |||
|
Pro forma adjusted EBITDA
|
$ | 258,329 | ||
SOURCE: Generac Holdings Inc.
CONTACTS:
York A. Ragen
Chief Financial Officer
(262) 506-6064
InvestorRelations@generac.com
Michael W. Harris
Director – Finance and Investor Relations
(262) 544-4811 x2675
Michael.Harris@generac.com